Buckle, Inc. (The) (NYSE: BKE) and Gap, Inc. (The) (NYSE:GPS) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitability, valuation and earnings.

Insider & Institutional Ownership

64.6% of Buckle, Inc. (The) shares are held by institutional investors. Comparatively, 57.3% of Gap, Inc. (The) shares are held by institutional investors. 41.7% of Buckle, Inc. (The) shares are held by company insiders. Comparatively, 27.3% of Gap, Inc. (The) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Buckle, Inc. (The) and Gap, Inc. (The)’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Buckle, Inc. (The) $943.58 million 0.70 $174.08 million $1.88 7.29
Gap, Inc. (The) $15.52 billion 0.56 $2.05 billion $1.73 12.76

Gap, Inc. (The) has higher revenue and earnings than Buckle, Inc. (The). Buckle, Inc. (The) is trading at a lower price-to-earnings ratio than Gap, Inc. (The), indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Buckle, Inc. (The) and Gap, Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Buckle, Inc. (The) 9.66% 20.95% 15.68%
Gap, Inc. (The) 4.46% 29.75% 10.69%

Dividends

Buckle, Inc. (The) pays an annual dividend of $1.00 per share and has a dividend yield of 7.3%. Gap, Inc. (The) pays an annual dividend of $0.92 per share and has a dividend yield of 4.2%. Buckle, Inc. (The) pays out 53.2% of its earnings in the form of a dividend. Gap, Inc. (The) pays out 53.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Buckle, Inc. (The) has raised its dividend for 3 consecutive years and Gap, Inc. (The) has raised its dividend for 7 consecutive years.

Volatility & Risk

Buckle, Inc. (The) has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Gap, Inc. (The) has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Buckle, Inc. (The) and Gap, Inc. (The), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Buckle, Inc. (The) 1 1 0 0 1.50
Gap, Inc. (The) 3 17 6 0 2.12

Buckle, Inc. (The) currently has a consensus target price of $18.00, indicating a potential upside of 31.39%. Gap, Inc. (The) has a consensus target price of $25.76, indicating a potential upside of 16.72%. Given Buckle, Inc. (The)’s higher possible upside, analysts plainly believe Buckle, Inc. (The) is more favorable than Gap, Inc. (The).

Summary

Buckle, Inc. (The) beats Gap, Inc. (The) on 9 of the 17 factors compared between the two stocks.

About Buckle, Inc. (The)

The Buckle, Inc. is a retailer of casual apparel, footwear and accessories for young men and women. As of January 28, 2017, the Company operated 467 retail stores in 44 states throughout the United States under the names Buckle and The Buckle. The Company markets a selection of brand name casual apparel, including denims, other casual bottoms, tops, sportswear, outerwear, accessories and footwear. The Company provides customer services, such as free hemming, free gift-wrapping, easy layaways, the Buckle private label credit card, and a guest loyalty program. The Company offers denims from brands, such as Miss Me, Rock Revival, Big Star Vintage, Buffalo Jeans, KanCan, Flying Monkey and Levi’s. Its other brands include Hurley, Billabong, Affliction, American Fighter, Fast & Furious, Oakley, Fox, Puma, Obey, RVCA, Salvage, 7 Diamonds, Nixon, Amuse Society, Free People, White Crow, Corral, Reef, Kustom, Timberland, UGG, TOMS, SAXX, Stance, Lokai, Ray-Ban, and Fossil.

About Gap, Inc. (The)

The Gap, Inc. (Gap Inc.) is an apparel retail company. The Company offers apparel, accessories and personal care products for men, women and children under the Gap, Banana Republic, Old Navy, Athleta and Intermix brands. Its products are available to customers online through Company-owned Websites and through the use of third-parties that provide logistics and fulfillment services. In addition to operating in the specialty, outlet, online and franchise channels, it also uses the Company’s omni-channel capabilities to bridge the digital world and physical stores. Its omni-channel services, including order-in-store, reserve-in-store, find-in-store and ship-from-store are tailored across its portfolio of brands. It also sells products that are designed and manufactured by branded third-parties, especially at its Intermix brands. It has Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico.

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